Economy Slowdown? Parle’s Rise in Net Profit To 15% in FY-19 Is Confusing ‘Economy Scaremongers’

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source: livemint

‘A drowning man will clutch at a straw’ is a famed theory that defines Parle G’s effort to grow its business beyond odds. Rather than playing the blame game, the decades-old biscuit manufacturing company has worked the way out to make a profit growth this year.

Going beyond Scaremongers

Earlier, Parle-G made breaking news with a report that it was planning to remove 10,000 workers and reduce production work due to an economic slowdown. This incident helped ‘Economy Scaremongers’ spread hate against the government’s economic policies which they believed was letting down countries’ growth.

source: indiamart

According to a report, Parle Biscuits’ F19 net profit was recorded at Rs 410 crore. Total revenue grew 6.4 percent YoY to Rs 9,030 crore, with revenue from operations alone growing nearly 6 percent to Rs 8,780 crore from the previous year (Rs 355). Other income jumped 26 percent to Rs 250 crore in FY19, aiding top-line growth.

GST’s role

BJP leader Amit Malviya has reacted to this incident and took a dig at “enlightened economists”. “Remember just a few days ago, ‘enlightened Economists’ were telling us how people were not able to afford even small packs of Parle G? Well, Parle Biscuits’ net profit has risen by 15% in FY19; revenue is up 6.4% to Rs 9,030 crore,” he tweeted.

Mayank Shah, head at Parle, had said in an interview previously, that market for popular Parle biscuit brands such as Parle-G had been worsening since India turned out a nationwide goods and services tax (GST) in 2017, which taxed a higher duty on biscuits costing as low as 5 rupees, or 7 cents a pack.

source: indiatoday

Due to the higher tax slapped on Parle, it forced the company to offer fewer biscuits in each pack, hitting demand from lower-income consumers in rural India, which provides more than half of Parle’s revenue. “Consumers here are extremely price-sensitive. They’re extremely mindful of how many biscuits they are getting for a particular price,” Shah said.

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